The US economy The premier said he is healthy and shows few signs of impending recession, and can afford higher interest rates. Federal Reserve (Fed) from st louis, James Pollard.
Financial markets are suggesting a recession may arrive sometime next year as Americans grapple with the highest inflation in four decades and the Federal Reserve raises borrowing costs.
But Bullard said the central bank would not have to push the economy into recession or dramatically increase unemployment to bring inflation down to a 2% target.
Now we have a lot of inflation, but the question is: Can we get back to 2% without disrupting the economy? I think so”He said.
Bullard’s optimism coincides with a series of interest rate hikes by the Federal Reserve, which are aimed at combating America’s highest inflation in 40 years.
Higher rates limit the ability of consumers and businesses to borrow and spend, which can limit growth and inflation. But it also carries the risk of the economy falling into recession.
Consumer prices rose 8.6% in May from a year ago, and the government’s inflation report on Wednesday may show that it has risen.
Bullard also said he currently supports a 0.75 percentage point rise in the Federal Reserve’s benchmark short-term interest rate at its next meeting this month. The interest rate is currently between 1.5% and 1.75%, after a rise of 0.75 percentage points at the June meeting, the highest since 1994.
Risk of ‘sudden’ changes
On her part, the Speaker of the House of Representatives said: Kansas City Reserve BankAnd the Esther Georgewas more cautious, noting that faster-than-expected changes in the federal funds rate could weigh on the economy and financial markets, so consistent, well-connected increases are best in the current uncertain environment.
“This is already a historically fast pace of interest rate increases for households and businesses to adjust to, and sudden changes in interest rates can lead to tensions, both in the economy and in financial markets.”He said.
George also opposed the Federal Reserve’s higher-than-expected three-quarter percentage point increase in June.
“I find it remarkable that just four months after the start of the rate hike, there is a growing debate about the risks of a recession, with some forecasters anticipating a rate cut early next year.”pointed out.
He added that such expectations suggest to him that the rapid pace of interest rate hikes brings the risks of monetary policy tightening closer than the economy and markets can adjust.